The process of fighting a non-judicial foreclosure can be complicated from a homeowner’s perspective, since there is no pre-existing lawsuit in which to participate. Instead, the homeowner must file their own lawsuit to seek a temporary restraining order, a preliminary injunction, and a permanent injunction against the foreclosure. This means that they have the burden of proof, in contrast to a judicial foreclosure, in which the lender brings the lawsuit and has the burden of proof.
In a non-judicial foreclosure, the lender is proceeding on the basis that the mortgage or deed of trust provides for its right of foreclosure. This means that your lawsuit will ask the judge to stop the foreclosure proceeding until they can review your argument against the foreclosure. In legal terms, this stop is known as an injunction.
Getting a Temporary Restraining Order
A temporary restraining order (TRO) is usually the most straightforward part of the process. A TRO is available when the person seeking it would suffer irreparable harm if the judge does not issue the TRO. A judge likely will understand that losing your home would cause irreparable harm. They can issue a TRO without holding a hearing and with minimal notice to the lender. In many cases, the lender will not respond, so the judge will issue a TRO that stays in effect until the hearing on the preliminary injunction.
If the judge is not sure whether your case has merit, you may need to post a bond to compensate the lender for any losses that it incurs during the process of resolving the case. You will reclaim the bond if you prevail, but it may be expensive in the meantime. A judge may grant a bond waiver to someone with low income if the judge believes that the homeowner’s case has some merit and that the lender will not suffer unreasonable harm because of the delay.
Getting a Preliminary Injunction
The judge will review a request for a preliminary injunction more carefully. They will grant the injunction if the homeowner seems likely to prevail at trial, and the balance of the equities weighs in their favor. This means that they would suffer greater harm from the foreclosure than the lender would suffer from missing out on payments. Usually, the balance of the equities tilts in favor of the homeowner, so the main hurdle is proving that they are likely to prevail at trial.
A preliminary injunction may extend the TRO, or it may require the lender to work with you on trying to reinstate or pay off the mortgage. If you do not get a preliminary injunction, your options will be limited. Not getting the injunction does not mean that you cannot continue with the lawsuit, but the lender also can continue with the foreclosure. You can seek a writ from a higher court to overrule the denial of the preliminary injunction, but these writs are rarely granted.
Getting a Permanent Injunction
A foreclosure case often does not reach a final hearing on a permanent injunction. Getting a preliminary injunction should give the lender plenty of motivation to negotiate a fair settlement or restart the foreclosure process. It can also try to get the injunction lifted if it complies with any orders of the court.
If you do proceed to a hearing on a permanent injunction, you will need to show that the foreclosure would violate state law or the mortgage terms. Each side likely will present evidence, such as witness testimony and sworn statements. If the judge finds that the foreclosure more likely than not violated the law or the mortgage terms, they will grant a permanent injunction. Otherwise, the injunction will be denied. (It is worth noting, again, that most cases do not reach this stage.)